This deal qualifies. It still loses money.
DSCR 1.11 — the lender approves it. Real cash flow: minus $1,041 a month. The pro-forma in the listing left out vacancy, maintenance, CapEx and management, and it overstates your return by $18,612 a year.
DSCR is rent divided by the property’s debt payment, and most lenders will approve a DSCR loan at 1.00 or above — sometimes lower. That is a lending test, not an investment test, and the difference between the two ruins people. A DSCR of 1.11 means the rent covers the mortgage payment; it says nothing about vacancy, maintenance, capital expenditure or management — the four costs that every pro-forma in every listing quietly omits. Add them back on a $700,000 rental at $5,200 rent and an apparent +$510 a month becomes −$1,041 a month. The lender still says yes. The deal is still bad.
What the lender sees. What you'll live with.
The DSCR that gets you approved, and the cash flow that actually lands in your account. They are rarely the same story.
Use the actual market rent, not the number the seller hopes for.
DSCR loans usually require 20–25% minimum.
Roof, HVAC, water heater. Not optional — just deferred.
Self-managing isn't free. It is unpaid work you have chosen not to price.
The lender approves this. The deal still loses money.
DSCR 1.11 — the lender says yes. Real cash flow $-1,041/mo — the deal says no. Those are different questions and only one of them is ours to answer for free.
The pro-forma, and the truth.
Gross rent at the bottom. Every real cost stacked on top of it. What survives at the top is your actual cash flow — and it is usually a much smaller number than the listing implied.
Send us the address. Adriana will underwrite it properly — and tell you to walk if it doesn’t work.
Illustrative only. DSCR requirements, minimum down payments, and rate pricing vary by lender and by loan-level price adjustments; many DSCR programmes also carry prepayment penalties, which conventional loans do not. Vacancy, maintenance, CapEx and management percentages are planning conventions, not guarantees — your actual figures will differ, and an old roof or a bad tenant will differ a great deal. Not a commitment to lend. Equal Housing Opportunity.
Should you walk away?
A DSCR loan will fund this at 1.00. That is the lender protecting the lender. Here is the honest read on whether the deal is worth doing at all.
You'd be buying appreciation, not income.
This property costs you $1,041 a month — about $87,472 over 7 years. That is not an investment producing income; it is a leveraged bet that the property appreciates enough to cover the bleeding. Sometimes it does. But call it what it is, size it accordingly, and never let a DSCR of 1.11 convince you the deal is safe just because a lender agreed to fund it.
From here to the keys — five steps.
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~60 secondsWhat happensShe will fund a 1.00 DSCR because a lender will. She will also tell you the deal is bad, because it is.
Same dayWhat happensUnderwritten against real documents — not a soft letter any lender prints.
~24 hoursWhat happensListing agents call Adriana. She picks up. That is worth more than a bid.
Your timelineWhat happensConditions cleared, docs signed, funded. And she tells you when PMI ends.
To the dateWhat happensThree investors. One bought the pro-forma.
Tap any one to see the numbers.
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"A broker who will tell you no is the only kind whose yes means anything."
Everything people actually ask.
What is DSCR?
Debt Service Coverage Ratio — the property's monthly rent divided by its monthly debt payment (usually PITI). A DSCR of 1.00 means rent exactly covers the mortgage. Most DSCR lenders want 1.00 or above; some go to 0.75 with pricing adjustments.
Does a DSCR of 1.00 mean the deal is good?
No, and this is the most expensive misunderstanding in real estate investing. DSCR 1.00 means the rent covers the mortgage. It does not cover vacancy, maintenance, capital expenditure or management — all of which are real, all of which are certain, and none of which appear in the ratio. A property at DSCR 1.00 is, in reality, losing money every month.
What DSCR do I actually need for a deal to work?
As a working rule, around 1.25 or better before the deal has genuine room — that is roughly the margin that absorbs vacancy, maintenance, CapEx and management and still leaves cash flow. Below about 1.15 you are usually subsidising the property out of your salary and calling it an investment.
What is CapEx and why does it matter so much?
Capital expenditure — the roof, the HVAC, the water heater, the windows, the sewer lateral. These are not maintenance; they are large, infrequent and absolutely certain. Budgeting nothing for them does not mean they will not happen. It means you will fund them from your own pocket, usually at the worst possible moment.
Should I count property management if I self-manage?
Yes. Self-managing is not free — it is unpaid work you have decided not to price. It also makes the deal look better than it is, and if you ever want to stop, or you get sick, or you buy a fourth property and run out of evenings, the 8% appears instantly and the deal that 'worked' stops working.
Do DSCR loans check my personal income?
No. That is the entire point of the product. The property qualifies on its own cash flow, so there are no tax returns, no W-2s, and no debt-to-income calculation. This makes it enormously useful for self-employed investors and for anyone whose portfolio has grown past conventional limits.
How many DSCR loans can I have?
Generally unlimited — which is a genuine advantage over conventional financing, where you hit a wall around ten financed properties. Each DSCR property stands on its own. That is the strength of the product, and also how people end up with six properties that each lose $600 a month.
Do DSCR loans have prepayment penalties?
Often, yes — commonly a 3–5 year declining structure. This differs sharply from conventional loans and it matters enormously if you plan to refinance or sell early. Always read the prepayment terms before you sign, and ask us to read them with you if the language is unclear.
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The other eight calculators.
Each one shows you a number the rest leave out.